The annual results released yesterday by MTN confirm the growing role of data services for African mobile operators. The group reported that approximately 15% of its revenues last year came from data. Frost & Sullivan sees this as a clear indication that the days of data consisting only of basic SMSs and accounting for less than 10% of an operator's revenue are gone.
"There is an increased demand for services such as high speed Internet, VPN and mobile Internet," says Frost & Sullivan ICT analyst Silvia Hirano Venter. "Interestingly, mobile operators are no longer focusing on selling these services only to the enterprises segment either."
Operators are becoming more and more aware of the needs of residential clients. In many countries, they are increasingly affluent and seeking practical solutions for their day-to-day needs.
Mobile phones are no longer seen as only a tool for basic phone calls and SMSs. They're slowly starting to replace personal computers. In sub-Saharan Africa, where a PC is still quite expensive, there is less incentive for consumers to acquire laptops or desktops if they can do what they need from their phones.
An interesting aspect of the sub-Saharan African market is that there is demand for both the very basic and cheapest handsets as well as smart phones.
"Telecommunications in sub-Saharan Africa is changing, and the need to bring basic services to people living in the most remote areas is long overdue," Venter says. "Mobile phones are helping to overcome issues like illiteracy. For instance, it's becoming simple for anyone to transfer money to a distant relative or friend via their mobile handset."
Wireless Internet is also making it possible to set up Internet cafés in areas outside of urban centres. Kiosks with shared cell phones and computers run by solar power are now viable in the most remote areas. These offer access to the wealth of information available on the Web.
While the landscape above the ground is changing rapidly, things underground are however still catching up with the high speed of a globalised and technologically modern world.
"One of the common trends amongst operators in sub-Saharan Africa is their high CAPEX over the next few years," Venter notes "This is due to the roll out of basic fibre optic cables."
For instance, Angola and Kenya are amongst the most prosperous countries in the region. Both are experiencing a very high demand for data services and other advanced value added solutions. However, the backbone and backhaul infrastructure capacity in both countries is still not quite adequate to support this high traffic volume.
Therefore, while operators are all still busy laying basic fibre optic cables throughout the country, they also have to worry about the roll out of infrastructure that will be able to support the demand for more advanced services.
"In order to maximise these investments and guarantee an adequate foundation for next generation networks, it is crucial that operators carefully plan their CAPEX strategy," Venter cautions. "One of the ways to reduce CAPEX in the long term is to leapfrog to an IP environment. This still causes cold feet amongst many operators though, as they fear that the high investment required will not be paid off by the potential demand."
Another solution, which is extensively applied in countries across the globe, is infrastructure sharing.
"Through infrastructure sharing, operators can save up to 60% of their operational expenditure," Venter says. "However, some operators still fear tight competition and would rather roll out everything themselves than lease some of the infrastructure from a direct competitor that may still overcharge for many of the services."
With most infrastructural development predicted to be finalised by 2013, it is very likely that any operator interested in entering a new market in the region will lease the infrastructure or simply outsource some aspects of it to a third-party company.
Whatever choice an operator makes, it is important to bear in mind that customers are no longer satisfied with a faulty network or poor quality services. Therefore, operators have to assure that their infrastructure for voice and data services can handle more and more customers, especially if they have been exposed to advanced technologies before.
"Telecoms operators that are not strong in the data segment will need to revise their focus and strategies," Venter says. "MTN and other mobile operators are forming strong joint ventures and acquiring ISPs and companies in other segments in order to guarantee a wider range of good quality services."